Berlusconi: successful businessman who screwed his country

After 17 years, the buffoon of Italy is finally gone. But who was he in reality?

Berlusconi was born to a middle-class family of a bank employee in Milan. In primary school, young Berlusconi wrote homework assignments for his classmates in exchange for morning snacks. In high school, he played the double bass and sang with a band. He attended Milan State University, from which he graduated in 1961 with an honors degree in marketing. While at university, he signed on to cruise ships as a musical entertainer. Since his university days, he was accustomed to party and fun, treats that he would showcase regularly throughout his business and political career.

A twenty something, party-lover, self-motivator, Berlusconi started up in the construction industry. He would buy and sell land in and around Milan. His break came when he acquired a vast stretch of empty farmland near the Milan airport. His fortunes turned when the landing pattern was changed and that patch of land, obtained for pennies, became an overnight fortune.

He didn’t stop at construction. Being a musician, a performer and an extrovert by nature, his attention was naturally drawn to TV. Local TV stations, limited in number, were forbidden by law to become national, avoiding competition with state-owned RAI networks. Defiant Berlusconi & Co set up local TV stations and dispatched motorcycle riders to main cities disseminating news pre-recorded on tapes.

In the end of 80s, Berlusconi and his family/friends were heading a conglomerate of companies in media, publishing and broadcasting obtained through mergers and acquisitions. Coincidentally – this contributed to Berlusconi’s soaring fortunes – Italy was on a sharp economic rise during the same period; in 1987 it became the 5th economic power in the world, with its GDP rising by more than 18%. Berlusconi crowned himself the king of Italy by becoming the owner of a star soccer team of AC Milan.

As of 2011, Berlusconi is worth an estimated $6.2bn (according to Forbes, 3rd wealthiest in Italy, 118th wealthiest in the world in 2011).

Notwithstanding his business acumen and success, Berlusconi’s fortunes in politics were not quite on par with his business achievements. On his political count there were three election victories (1994, 2001, 2008), two defeats (1996, 2006), more than 23 judicial investigations (mostly related to corruption), more than 51 votes of confidence in his government (since 2008).

Inside Italy, Berlusconi inspired awe, disgust and respect at different times. Internationally, his idiosyncratic character earned him friends and accolades in quarters where no European was previously seen. His close friendships with Russia’s Putin Lybia’s – now defunct – Qaddhafi and, at the same time, America’s Hillary Clinton were considered controversial.

Berlusconi seem to have always intermingled personal and professional relationships.

One example is information revealed by WikiLeaks about Berlusconi’s politically disguised business activities: deal arrangements on a Gazprom-Eni joint venture bringing gas from Russia to Europe; Berlusconi’s unconditional support of Putin during the Georgia-Russia conflict in 2008; decisions on Italy’s foreign policy to be based on Berlusconi’s inner circle and business associates rather than the country’s foreign interests.

Another example is his relationship Socialist PM Bettino Craxi (Berlusconi’s political mentor) who became godfather to one of Berlusconi’s children. Mr. Craxi’s brother-in-law was a mayor of Milan, which was also power center of Berlusconi’s business empire. In 1994, the recently deposed Tunisian leader Ben Ali – whose rise to the presidency was directly supported by Italy – provided refuge to Mr. Craxi.

But Berlusconi has been vocal in pointing out his political achievements to all and any who would listen. Thanks to his fiscal policies – as he boasted in international conferences in front Germany and France – Italy avoided the housing bubble, its banks did not go bust and its unemployment rate hovered around 8.5% (>20% in Spain). The budget deficit in 2011 is estimated to be circa 4% of GDP (6% in France).

However, these numbers are deceptive. The Economist’s special report revealed that only Zimbabwe and Haiti had lower GDP growth than Italy in the period of 2000-2010. GDP per head in Italy fell, and the public debt is still 120% of GDP.  Berlusconi’s Italy is 83rd in the World Bank’s “Doing Business” index, below Belarus and Mongolia, and 48th in the WEF’s competitiveness rankings, behind Indonesia and Saudi Arabia.

Thus Berlusconi leaves behind an embittered, inert and economically-degraded Italy.

His businesses are running as usual and his macho attitude and chase of women continues to date with late-night parties, which have affected his health dramatically and irreversibly.

Berlusconi’s is thus a rather sad story of how a successful businessman wouldn’t – he most probably could have if only he tried –  do the same for his country as for his businesses. I guess this makes him the most unpatriotic and un-Italian of all Italians.

As for Italy, things look grim. If the newly appointed PM Monti does not get his game together fast, Italy might yet turn to be another Greece.

what bee hives and ants can teach about democracy and common good

When spring comes, bee hives divide into two, one group staying in, the other looking for new home. It’s not the queen assigning “home-searching scouts” but older bees. Scouts fly off looking for places and announce their finds by special dance moves, describing routes to their finds – more dancing for better spots.

Similarly for ants. A leaderless, self-directing society that expands democratically and which communicates/transmits messages using pheromone.

Our politicians/businessmen  can learn from bees/ants/…:

  • Don’t be die-hard/fanatic about your choices/finds
  • Focus on your responsibilities
  • Forget politics
  • Listen to/consider your peers
  • Let bygones be bygones

Commonalities between markets and (usually failing) politics

The logic of the market is predicated on the pervasive and obvious inequality of humans. No two people have the same scales of values, talents, or ambitions. It is this radical inequality, and the freedom to choose our own lot in life, that makes markets – division of labor, production and distribution of goods and services – possible. Our differences are reflected in our outcomes and results which are converted into market commodities/products/services. The latter we exchange for what we need/want but do not have.

In (most of modern) politics the ideological parallel is easily imitated. For example, system of voting is designed to replicate the market’s participatory features. In fact, it is a perverse distortion of the market system. In markets, you get the goods you pay for. If you don’t and there’s been a violation of contract, you have legal recourse. In voting, people are not actually purchasing anything but the politician’s word/promises, which is legally un-claimable. Furthermore, a politician has every incentive to lie, manipulate, or twist to produce the desired result.

“Politicians shake our hand before elections and our trust thereafter.”

Politics does not consider individuals. We are merely a tiny speck on the vast blob called “nation,” and what this blob “thinks” is only relevant insofar as it accords with a political agenda advantageous to the country and its friends. During elections – our one opportunity to feel ourselves important and involved in our country’s politics – we are asked to cast ballots for people we do not know (or know what they want us to know) because they make promises they are under no obligation to keep – or keep them if it advances their agenda, enlarges their purse or contributes towards another election term for them. What’s even worse, the voting gesture is pointless on the margin. The chances that any one vote will actually have an impact are so infinitesimally small as to be meaningless.

In markets, success means entrepreneurial talent or business acumen which translates into the ability to anticipate, create and serve the needs of the market. In politics, success means the ability to twist and manipulate public opinion so that enough fools (so regarded by politicians) reaffirm the politician’s power and ambitions. It takes special talents to do this, which are not cultivated in good families – read Machiavelli. In markets, most successful usually deserve the credit due to merit, hard work and shrewd vision. In politics, the most successful usually excel in art of acting,  (in best of cases) rhetoric  –  in recent years, we hardly have seen any – narrow-mindedness and self-aggrandizement.

A politician, according to Ambrose Bierce’s dictionary, is “an eel in the fundamental mud upon which the superstructure of organized society is reared. When he wriggles he mistakes the agitation of his tail for the trembling of the edifice. As compared with the statesman, he suffers the disadvantage of being alive.”

What about likes of Patrick Henry and George Mason? They wanted to separate (the American) society and government to protect the people from being manipulated by cunning political forces.  Albert Jay Nock was right to characterize a country, democratic or otherwise, as a parasite on society, whereas markets (especially those where innovation and entrepreneurship are common) and economic production represent lifeblood of (free/healthy) societies.

Politics and markets affect each other. When politics has an upper hand, life of common people gets worse. When markets have an upper hand, life of people gets worse as well.

Judge for yourself.

Rep. party failures of recent years (part 1)

America’s most critical priorities – emergency preparedness, economic security, access to affordable health care, quality education, and energy independence – have become an afterthought in the wake of recent years of Republican culture and domestic as well as foreign politics.

Let’s take a 360-degree look at it in two parts (part one tackling economic issues, health care and education while part two will cover civil rights, homeland security and environmental policies of Republicans).

Economic Security

  • Overtime Pay: Bush administration changed the rules that decide who is eligible for overtime pay. The changes affected some eight million workers. Millions of working people now face unpredictable work schedules and reduced pay because their employers may not have to pay a premium for demanding that they work more than 40 hours a week. Wages have declined, even as the cost of health care, child care, and other essential expenses has continued to climb;

  • Minimum Wage: For the eighth year in a row, Republicans have failed to raise the minimum wage.  Minimum wage employees working 40 hours a week, 52 weeks a year, earn $10,700 a year, $5,000 below the poverty line for a family of three.  It is practically impossible for minimum wage workers to afford adequate housing in any area of the country;
  • Tax Credits For Employers of Reservists: Republican policies render employers reluctant to take military reservists (who can be called for 24 months at a time) on the payroll by having blocked attempts to introduce policies of rewarding businesses that continue to pay salaries to their employees serving oversees.

Health Care

  • Health Care: Health care costs have had unprecedented increases during recent years; premium and prescription drugs chief among those.  Premiums for employer-sponsored health insurance rose an average of 6.1% in 2007, less than the 7.7% increase reported last year but still higher than the increase in workers’ wages (3.7%) or the overall inflation rate (2.6%), according to the 2007 Employer Health Benefits Survey;

  • Covering the Uninsured: The number of uninsured Americans dipped slightly last year – from 47 million to 45.7 million – but many experts say the number still signals a crisis in America;

  • Stem Cell Research: Funding restrictions, imposed by President Bush (who used his veto), are impeding promising research by preventing the use of federal funds on the best available stem cell lines;

  • Immigrant Children’s Health Care: Republicans have failed to enact the Immigrant Children’s Health Improvement Act (ICHIA), which would allow states to cover legal immigrant children and pregnant women under Medicaid and the State Children’s Health Insurance Program (SCHIP).  The current prohibition on covering these people unfairly singles them out for restricted access to public health coverage programs;


  • Higher Education Act: Republicans partially reauthorized the Higher Education Act as part of budget reconciliation.  While the bill included some additional financial aid for students eligible for Pell Grants, the new aid fails to prioritize the neediest students and imposes new hurdles.  Republicans passed up on an enormous opportunity to make college more affordable, instead using saving from greater efficiency in the student loan program to partially offset the budget deficit and other expenses;

  • Development, Relief, and Education for Alien Minors Dream Act: Republicans did not allow the Development, Relief, and Education for Alien Minors Dream (DREAM) Act to pass, which would allow states to offer in-state tuition to immigrant students and also allow long-time immigrants who grow up in the United States, graduate from high school, and demonstrate strong moral character, the opportunity to adjust their immigrant status.  Although the DREAM Act enjoys broad bipartisan support, Republicans failed to bring the bill to the Senate floor.

To be continued…